Banks under PCA

This has reference to ‘A closer look at FinMin, RBI stand-off’ (November 8). In the current economic situation, no bank under PCA (prompt corrective action) is likely to come out of triggers, even with infusion of additional capital. The financial results of each bank under PCA show that CAR is on the decline even after capital infusion, since the provision requirements are in excess of the capital infused. Even if the pace of growth of NPAs comes down in the current financial year, the ageing of existing NPAs will raise provision requirements substantially and whatever is infused will only help the bank to float at the same dangerous CAR level. Instead of seeking a surplus transfer from the reserves of the RBI for capitalising PSBs under PCA, the RBI may well be asked to float a ‘Dollar Deposit Scheme’ for NRIs and utilise the proceeds to create an ‘NPA Redemption Fund Scheme for PSBs’ (NPA fund). The fund can be used to buy bonds to be issued by PSBs with sovereign guarantee. Since the resolution of existing stressed assets is likely to be tapered off in five years, five-year redeemable bonds (under Tier-I or II or otherwise) with periodic partial repayments along with annual coupon may be fixed. Exchange risk shall be hedged and the premium will be borne by PSBs. The RBI in turn might price and term the ‘Dollar Deposit Scheme’ accordingly. The scheme, if introduced, will address the twin issues faced by banks under PCA — inadequate capital as per Basel norms and high level of net NPAs — as a portion of funds raised will go towards provisions.

Coimbatore

Former RBI Governor Raghuram Rajan has stated that the central bank is like a seat belt for the government, meant to protect it from accidents. The government has been imposing its ideas — demonetisation, for instance — on the RBI without providing the central bank the space to play its mandated role.

The government is reducing the RBI into an implementing authority; its regulatory role is being diluted. Drawing on a cricket analogy, Rajan said the role of the RBI isn’t about playing to the gallery, like the flamboyant Navjot Singh Sidhu, and blindly adhering to the government’s diktats, but to play cautiously and address thorny issues, like the role played by Rahul Dravid.

Bengaluru

The age-old tradition of crowd-funding weddings, which is still being practised by villagers in Baadigam, a Jatapu tribal hamlet in Kothru mandal of Andhra Pradesh’s Srikulam district, is probably the most effective way to get rid of the dowry menace and save parents the burden of wedding expenses.

It is unfortunate that a large number of girls in our society remain unmarried because their parents are unable to meet the dowry demands. Though the Dowry Act has been enacted to put an end to this evil practice, parents of prospective grooms, mostly in North India, continue to demand huge sums of money and other accessories as dowry. Government aid and crowd-funding would help address this issue.

Hyderabad

Post 2014, the Democrats in the US, smarting from electoral setback, had been intent on shaping an opposition solely woven around Trump as an individual rather than as a political rival occupying the Oval office. During this uneven course, Trump staved off the onslaught by wielding his presidential tongue unsparingly. Come the US midterm elections, the president himself mounted that very Trump-centric theme, on the strength and allegiance of his growing adherents and highly personalised campaign. By putting bulk of his efforts on the Senate race, which would help him leverage his powers on presidential appointments and to firewall possible impeachment, he secured singular success. His resultant lack of focus on House races ended up in the Democrats wresting majority. This split-mode campaign perhaps ended up serving his own needs far more that those of his party.

Navi Mumbai

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